This allows us to make some important assumptions about what the price of gold will do. Gold can act as portfolio insurance or as a safe haven against risks associated with the first two factors. One of the most important dynamics of the gold market is that it is cyclical, meaning that it tends to follow cycles. Obviously, any investment has advantages and disadvantages, but as a diversifying investment, gold is an excellent option for risk-conscious investors.
Gold should continue to be sought as a safe haven if there is significant uncertainty about future interest rate levels. It is not surprising that gold is considered to be more attractive when the cash deposited receives a negative real return, compared to those glorious days when you could get a real rate of 4% without taking any risks. In this baseline scenario, I would expect the price of gold to fall back from its highs as a result of increased risk appetite. In addition to this expected “turn”, there are other unavoidable realities that should presage an increase in gold prices.
But there is a fairly clear relationship between the stability of the neo-liberal financial order (or lack of it) and the demand for gold as a way of preserving wealth. However, gold has usually recovered quickly once the threat of deflation passes, a sign of asset quality. Gold has a unique ability to detect inflation, and as soon as the threat passed, gold retreated, while overall asset prices rose. abrdn's physical gold stock ETF (SGOL A) is designed to track the spot price of gold bars by storing gold ingots in a secure vault in Switzerland that is audited twice a year.
I use a combination of technical analysis and observation of market fundamentals to make my predictions about the price of gold. Gold has a unique ability to detect inflation, and as soon as the threat passed, gold retreated while overall asset prices rose. In fact, the winter months, from December to February, tend to be the strongest time for gold in most years, and the opposite is the case during the summer.